Taxman targets a toddler with two expensive flats

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Taxman targets a toddler with two expensive flats

It turns out a 3-year-old has two high-end apartments.

The purchase was paid in part by the toddler’s father, who wired money through an account opened in the name of the child, while the rest was paid by the grandfather.

The toddler failed to pay inheritance tax.

A 20-year-old owns a high-end apartment and land despite having no income other than his monthly wages from his job at his father’s company, where he worked very few hours. The 20-year-old was fined by the tax agency for dodging inheritance tax and income tax.

A spouse of a celebrity without any clear source of income turned out to have purchased a high-end apartment through illegal cash inheritance without properly reporting the transfer and paying tax on it.

These were few of the 224 cases the National Tax Service (NTS) on Tuesday released currently being investigated by the tax agency. The agency is looking for evasion related to the purchase of high-end real estates or living in expensive long-term deposit (jeonse) rent housing without specific income. The government exempts a maximum of 50 million won ($43,037) on jeonse deposit inheritance.

The NTS said it has particularly targeted people under 30 who have purchased real estate in areas that have recently seen a significant increase in prices, including four popular Gangnam districts ? Gangnam, Seocho, Songpa and Gangdong - and the three districts in Gangbuk - Mapo, Yongsan an Seongdong.

According to the tax agency, out of the total 224 that are being investigated, nearly 74 percent, or 165 people, were aged 30 years old or under while six were under aged.

In some cases, purchases were reported to the tax agency far below their actual value.

The tax agency said such illegal real estate inheritance has risen sharply. Based on a study by the Korea Appraisal Board, these cases rose 25.2 percent compared to the previous year to 111,863 cases in 2018.

The NTS added that since August 2017 the government has investigated 2,228 people on illegal inheritance and capital income tax evasion and collected 439.8 billion won in taxes.

The NTS said the most recent investigation started on Oct. 11 through a joint effort of different government departments, including the Ministry of Land, Infrastructure and Transport and the Financial Services Commission.

The latest investigation is part of the government’s larger efforts to cool the housing market, including the increasing apartment supply in the greater Seoul area as well as capping the preconstruction sales prices on reconstruction projects.

A Korea Appraisal Board study found that in the first nine months of the year purchases of apartments in Seoul rose fastest for people in their 30s. They purchased 10,876 units, which is up 28.3 percent. Those in their 40s followed with 10,744 units, up 28 percent.

Finance Minister Hong Nam-ki on Monday during a press conference said the price caps will be extended to more areas if the housing market fails to stabilize.

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